Microsoft to Move Bulk of Ad Dollars to Digital Channels

VIDEO: Tells 4A's That Media Mix Will Change By 2010

LAS VEGAS (AdAge.com) -- It may be dumping hundreds of millions of dollars into an old-school TV campaign for its latest operating system, but Microsoft expects it will move the majority of its ad budget into digital channels within three years.

"We're actually pretty confident that by 2010, the majority of our media mix will shift to digital," Mich Mathews, senior VP-central marketing group at Microsoft, said in an address at the American Association of Advertising Agencies Media Conference and Trade Show here.

Already big web spender
In 2006, Microsoft spent $447 million in measured media, according to TNS Media Intelligence. The media-spending tracker said 18% of that was spent on internet advertising -- far and away above the national average. Still, it laid out $69 million on network TV, $33 million on cable, $118 million on magazines, $67 million on business to business and $29 million on national newspapers.

Ms. Matthews said the shift is simply an effect of following consumers, who are spending more and more time on the web and becoming more important in deciding how marketing messages are distributed. She followed Procter & Gamble Co.'s Jim Stengel in citing the importance of consumer control to the marketing process, calling the epoch the "Era of Customer Participation."

As proof of how much consumers have inserted themselves in the marketing process, she cited the hundreds of mash-ups of a popular ad for the hot-selling "Gears of War" video game for Microsft's Xbox system.

More collaboration
Ms. Matthews said the key to navigating all the change is getting collaboration among various disciplines. "I want everyone in the room at the same time, including the PR guys," she said.

Her speech was notable for its many mentions of public relations, not something you'd expect at a media conference. In pointing out the importance of earned media, she mentioned Dove's much-ballyhooed "Campaign for Real Beauty," which has been expert at amplifying ad executions with PR by tying them into news events.